Pakistan has emerged as the most improved economy globally in terms of sovereign risk reduction, topping the list of emerging markets with the sharpest decline in default probability, according to data from Bloomberg Intelligence cited by Adviser to the Finance Minister Khurram Schehzad.
In a statement on X, Schehzad highlighted, “As per the latest data, Pakistan stands out globally as the most improved economy in terms of reduction in sovereign default risk, as measured by CDS-implied probability.”
Pakistan’s CDS-implied default probability notably dropped from 59% to 47%, marking an improvement of 1,100 basis points. This reduction is the largest among all major emerging market economies. Other nations showing smaller but still significant improvements include Argentina (-7%), Tunisia (-4%), and Nigeria (-5%), while sovereign risk has unfortunately increased in economies like Turkiye, Ecuador, Egypt, and Gabon.
Schehzad characterized this development as a “resounding signal to global investors,” asserting that the sharp decline reflects growing investor confidence in Pakistan’s economic trajectory. He attributed this positive shift to several key factors, including:
- Macroeconomic stabilization
- The government’s structural reform agenda
- Timely debt repayments
- Strong engagement with the International Monetary Fund (IMF)
- Improved credit outlook by international credit rating agencies such as S&P and Fitch
“Pakistan is not only back on the global investment map—it is advancing with stability, credibility, and reforms at its core,” Schehzad declared.
Meanwhile, Prime Minister Shehbaz Sharif expressed satisfaction with the Bloomberg report, acknowledging its recognition of “important institutional reforms in various sectors, successful agreement with the International Monetary Fund and timely loan repayments, which are definitely evidence of improvement in the government’s economic situation.” He further stated, “Pakistan is among the few countries that, according to Bloomberg report, showed the most improvement in the economy in the last 12 months,” adding, “Pakistan is moving fast towards its strong economic future.” The premier concluded that these improved economic indicators are the direct result of the consistent hard work and dedication of the government’s economic team.
Pakistan’s improved risk profile follows its narrow escape from sovereign default in 2023. Facing critically low foreign reserves and mounting debt obligations, Islamabad successfully secured a short-term bailout from the International Monetary Fund (IMF), backed by key allies including Saudi Arabia, the United Arab Emirates, and China. In the aftermath, the country has implemented a range of IMF-advised structural reforms and fiscal measures aimed at achieving macroeconomic stability.
Earlier this month, Finance Minister Muhammad Aurangzeb reported that Pakistan’s economy likely grew 2.7% in the fiscal year ending June 2025, following a 2.5% expansion in the previous year. While the government initially targeted 3.6% growth in gross domestic product for this financial year, it later adjusted that to 2.7%. The International Monetary Fund projects growth of 2.6% for this fiscal year and 3.6% for the next. The government is aiming for 4.2% growth next fiscal year amid competing priorities such as boosting investment, maintaining a primary surplus, and managing defense spending amidst ongoing tensions with India.
